VAGUE SCHEME FOR "GREATER CHINA' GETS A DECIDEDLY MIXED RECEPTION

VAGUE SCHEME FOR "GREATER CHINA' GETS A DECIDEDLY MIXED RECEPTION

The vague notion of a "Greater China" encompassing China, Hong Kong and Taiwan ought to be more formally enshrined, even though manufacturing and trading ties among the three already are close, according to an increasingly popular opinion here.

Not everyone favors such a step, however.Sung Yun-wing of the department of economics at the Chinese University of Hong Kong, scoffed at such "utopian and counterproductive" ideas, noting that commercial ties have become inextricably entwined, thanks to market forces, and there is no need for outside help.

Coinciding with a conference on the subject, the Hong Kong General Chamber of Commerce produced a report saying Greater China already is a fact of life and one the United States should take into account when assessing its trade position in the region.

"The time is ripe" for formation of a Greater China that also may include the tiny Portuguese-administered enclave of Macao, according to Li Boxi, who heads a forecasting group under China's State Council, the paramount governing body.

Greater China could counter protectionism as well as help individual members, Ms. Li told a conference being staged here.

Beijing's support is self-serving. China regains sovereignty over Hong Kong in 1997 and over Macao in 1999. It would like Taiwan back in the fold, though that seems unlikely.

More immediately, China is embroiled in a nasty trade dispute with the United States. If it could lower its profile by nestling among the others, some of the sniping from Washington might be less intense.

More than half Hong Kong's manufacturing already is done across the border and Taiwanese manufacturers are pouring into China despite the qualms of their government.

Hong Kong handles a large portion of China's trade, most of the China- Taiwan trade and supplies or channels the bulk of China's foreign investment.

The mainland gains technology and expertise as well as cash. Its huge labor force gets something useful to do - without the need for subsidies - and the exports they generate are invaluable in boosting reserves and improving living standards.

Ms. Li and several other speakers at the conference focused on the possibility of protectionist walls being thrown up around free-trade blocs in North America and Europe.

"If the Asia-Pacific wants to become a nucleus of economic growth in the 21st century, it must increase cooperation among countries and ultimately form an economic coordinating organization," Ms. Li declared.

John Kuan, representing Taiwan's independent Democracy Foundation, called for establishment of a forum to facilitate exchanges among Greater China's four components. Ms. Li agreed, stressing that it should be non-governmental.

Assuming China actually played it that way, it would get around the absence of official ties with Taiwan, which is grudgingly allowing ever-greater economic links between the two.

The Chamber of Commerce study urges the United States to rethink the way it views China trade. Beijing's lopsided trade surplus should not be an issue in its status as a trading partner, it says.

While U.S. Commerce Department figures show China's trade surplus against the United States trebled between 1987 and 1990, there was a 16 percent fall in Greater China's surplus with the United States in the same period, the study says.

The study hails the latter as a more accurate picture that takes into consideration the steady shift of manufacturing out of Hong Kong and Taiwan into China. As Hong Kong and Taiwan trimmed their surpluses, so China's inevitably rose.

With recent agreement reached on protection of U.S. intellectual property in china, the trade imbalance is now the main thorn in Sino-U.S. relations.

The greatest threat, according to government and industry people here, is to China's most-favored-nation status.

A misnomer, MFN is granted to nearly all U.S. trading partners, ensuring them the lowest available tariffs.

Opponents on Capitol Hill want to strip China of eligibility either on grounds of unfair trade practices or to punish Beijing for human rights abuses.

Such a move also would batter Hong Kong and to a lesser extent Taiwan, according to analysts here, because of their increasing involvement in mainland business.

It also would rebound on U.S. companies with joint ventures or sourcing arrangements in China.